The little commission that couldn't

If you were worried about the deficit-reduction commission being developed by Democrat Kent Conrad and Republican Judd Gregg, then worry no longer. These is no deficit-reduction commission. There's a commission that will think up ideas for deficit reduction, but it won't be able to do anything about them.

The Conrad-Gregg commission will have 18 members and require the agreement of 14 of them before it produces recommendations.Those will then require a supermajority not only in the Senate, but also in the House, where no such mandate exists. This is the legislative equivalent of cooking a meal with one hand tied behind your back. The process is harder than usual and rich with new veto points. It's as if Conrad and Gregg concluded that reducing the deficit is too easy and that Congress needed a challenge. "Next time, they could also require the commission members to create a cold fusion reactor or retrieve a magical ring from inside a volcano," says Jon Chait.

Lawmakers have a peculiar resistance to admitting the problems afflicting their institution. There needs to be a Conrad-Gregg entitlement commission because bipartisanship has broken down. In response, Conrad and Gregg are setting a higher bar for bipartisanship? It's like trying to cure the flu by competing in a triathlon. You can respond to the breakdown of bipartisanship by making bipartisanship less necessary (say, by ending the supermajority requirement) or by trying to attack the roots of polarization. But this doesn't make any sense. If you're a deficit hawk, it's arguably worse than nothing, as it will make people think something is being done when nothing is actually happening.

Meanwhile, if you want to see what actual deficit reduction would look like, check out Jeff Frankel's 10 ideas for reducing the deficit. What stands between them and passage is not that Congress hasn't been presented with them but that Congress won't pass them.

Conrad and Gregg, whatever they are, are not complete idiots. They *know* that any such commission is doomed to fail. They *know* that placing even more burdens in the way of 'bipartisanship' makes it ever less likely to get the deficit under control.

Given the above the question becomes: What are Conrad and Gregg really trying to do here? What is there true motive?

Too bad! Some types of controls need to be in place before we can ever consider healthcare reform. I don't hold out much hope that Democrats or Republicans will adopt a plan to bolster our fiscal position.

This list is sort of OK until we get to the SocSec bit. Why not just get rid of the cap on taxed income to increase the SocSec holdings, rather than punish the baby boomers (a favorite target for the baby boomers' kids for some reason, I guess they hate their parents) by cutting the cost indexing and benefits and increasing the retirement age. Those three suggestions are favorites of the right wingers, but the thought of increasing the tax base raises howls of indignation from those wealthy folks who get their SocSec benefits AND get to have untaxed income which in effect gives them a 6.5% benefit before they even retire on all income over the cap. Why should they be rewarded for being rich? This is the most idiotic and irrational, narrow minded and bigoted approach to "saving" SocSec that I have ever heard and it is always trotted out as somehow or other reasonable, by moderate Dems as well as all color of Repubs. Another idea: tax all SocSec benefits on people with a retirement income from all sources in excess of the maximum SocSec benefit, so that they in effect get no benefit at all when their income exceeds a given amount (a form of means testing)?

"Why not just get rid of the cap on taxed income to increase the SocSec holdings"

Because SS benefits are also capped. FDR wanted a strong link between the payments and the benifits. In fact the SS "tax" was originally conisedered an insurance primium (much like the fees charged on whole life insurance policies). If Congress raises or eliminates the cap on taxed income without also raising or eliminating the cap on benefits, SS becomes just another low income welfare program.

The Conrad (D-ND) "Cat Food Commission" presumes that Social Security is the cause of the current $12 trillion dollar deficit and all future budget problems. In reality if you removed all Social Security payroll taxes and all Social Security benefit payments from the over all budget the deficit would actually be larger over the next ten years. In addition the Social Security system has a $2.5 trillion dollar surplus that has accumulated over the last 25 years, of all the programs of the Federal Government Social Security is in the best shape of all of them.

Conrad just wants to make sure anything that addresses the budget deficit can not make any changes to Agriculture subsidies for wealthy farmers in North Dakota.

The original Conrad-Gregg proposal had 16 members, 8 R's and 8 D's with two D slots allocated to the Administration meaning an 8 to 6 Congressional split between R and D. And in practical terms there would be no way to keep Conrad of Conrad-Gregg and Cooper of Cooper-Wolf off the Commission. If we assume that Republican leadership would name 8 members hostile to Medicare and particularly Social Security, then add in the votes of Conrad and Gregg for 'reform' then the Commission starts off with 10 votes for that and with Administration buy-in would have its 12 vote super-majority on the way in the door. You can see a description of the original version here right from Conrad's office:
http://budget.senate.gov/democratic/documents/2007/bipartisantaskforcehearingrel102307.pdf "Senators Conrad and Gregg introduced the Bipartisan Task Force for Responsible Fiscal
Action Act (S. 2063) on September 18. The bill would establish a 16-member task force comprised of eight Democrats and eight Republicans, designated by Congressional leaders and the President. Fourteen members of the task force would be current Members of Congress, and the remaining two members would be from the current Administration."

The new proposal by adding two members would change the dynamic a little if they are both congressional democrats thus restoring and 8 to 8 R to D balance among Congressional members but makes the numbers not shift much. Assuming that Conrad and Cooper are two of those eight and Admin buy in progressives dems would have to hold 5 out of the 6 remaining Dems to block action. And given the state of the Senate you know that at least one of the three spots under Reid's effective control will go to another Conservadem (and Baucus would be a natural choice) giving reformers at least 13 of their needed 14 votes, and if Reid bends and adds a centrist perhaps 14. Even if by some miracle Reid preserves two spots for liberal to progressive members, blocking action would mean Pelosi needing to having to name three defenders of Social Security while blocking any additional Blue Dog or centrist Budget Hawk. Probably not possible and even if it happens leaves progressives staring at a 13 to 5 split and the labels 'obstructionist' and 'denier'. If under that pressure one of the 5 remaining Dems cracks the proposal goes on a fast track basis to Congress where that same dynamic repeats. Having explicitly admitted that there is an 'entitlements crisis' by allowing the Commission to be established in the first place Democrats would be stuck in a lose/lose position, allow the bill's recommendations to be adopted (and no amendments are allowed) or block it and be revealed as feckless tax and spend ostriches with heads firmly stuck in the sand.

Going to 18 members seemingly eliminates the clear imbalance of the original proposal but does not in practice allow the non-Blue Dog democrats anymore than a figleaf of cover.

Interestingly cuts to Social Security benefits actually increase total public debt and don't reduce it.

Social Security collections over and above needed outlays score as a surplus for Unified Budget purposes but add to Public Debt on a compounded $1.05 per $1.00 basis.

Treasury runs a Debt to the Penny application that allows you to track changes in Public Debt between two given points. Total Public Debt on 9.30.99 was $5.656 trillion. On 9.29.00, the last day of the last full FY under Clinton it was $5.674 trillion, meaning that total Public Debt actually increased by $18 billion over that year.
http://www.treasurydirect.gov/NP/NPGateway

But didn't Clinton run a Unified Budget Surplus that year? Well yes he did, Social Security surpluses plus some spending restraint allowed Debt Held by the Public to go from $3.636 trillion to $3.405 trillion.

Cutting Social Security benefits has the effect of delaying drawdown of the Social Security Trust Fund balances which in turn because of the effects of compounding interest actual drive projections of future Public Debt up even as they drive projections of so-called Unfunded Social Security Liabilities down.

In fact the Trustees provide an alternative economic and demographic model under which Social Security full funds itself and continues to run surpluses forever.
http://www.ssa.gov/OACT/TR/2009/VI_OASDHI_dollars.html#150920
This model which is called Low Cost shows that Social Security cash surpluses (not including interest) would be $733 billion in 2085 but would actually add $5.3 TRILLION to Public Debt that year alone for a total amount of Public Debt attributeable to Social Security of $102.7 trillion. On the other hand the Unfunded Liability so loudly trumpeted by the Peterson people would be $0.

So when you hear David Walker and Robert Bixby using a $12 trillion current debt figure to argue for cuts to Social Security based on $x trillion dollars of Unfunded Liability understand that they are big fat liars. Cuts to Social Security simply delay the day that the General Fund needs to start redeeming its debt to Social Security and in doing so INCREASES total Public Debt projected forward.

There are reasons to tinker mildly with Social Security revenue and benefit formula, but reducing the numbers on the debt clock aren't among them. If Social Security was perfectly balanced between total revenues and total balances at the mandated level of reserves it would in nominal terms still add to the Public Debt every year AND require transfers from the General Fund to service the interest on that reserve. Odd but true.